C-557/12, Kone et al (not yet published) - Facts of the Case

The judgement of the ECJ deals with competition law issues concerning the elevator cartel. Several undertakings of European manufacturers of elevators were parties to the elevator cartel relating to the installation and maintenance of elevators and escalators in numerous Member States of the EU over a period of many years. According to the court, the intention of the elevator cartel was to divide the elevator and escalator market between the members of the cartel and to establish a certain market price. Thus, the elevator cartel manipulated the market and the competition in this industry. The result of the conduct of the elevator cartel was that the development of market prices was distorted. Concisely, a higher price than that which would have been achievable under normal competitive conditions of an efficient market was granted to the preferred undertakings of the cartel. In addition, the market shares of the members of the cartel remained largely unchanged.

The EC imposed a fine on the members of the cartel. On the Austrian national level, the Austrian Supreme Court upheld the order of the Austrian Antitrust Court, which imposed fines on certain members of the cartel. In these rulings, the courts stated that the members of the cartel coordinated their activities in respect of at least half the commercial volume of new equipment regarding elevators and escalators in Austria. In this context, the Austrian company, ÖBB Infrastruktur AG that is an important customer on the Austrian market for elevators and escalators brought an action for damages against certain members of the cartel before the Austrian courts.

The proceedings and the judgement of the ECJ concern only the alleged damages of the claimant caused by an undertaking being not a member to the cartel but benefiting from the cartel by matching the prices to the higher level of the members of the cartel (umbrella pricing). The claimant pleaded that the purchasing of elevators and escalators, as an effect of the cartel, in general, could not be performed under normal competitive conditions. The umbrella pricing by third undertakings not party to the elevator cartel shall be a direct effect of the cartel. The competitors not party to the cartel benefited from the existence of the elevator cartel whether in terms of profit margin, or simply of survival, if their cost structure was such that normal conditions of competition resulted in their removal from the market. According to the claimant, the members of the cartel shall compensate the related damages.

Applying the general principles of Austrian tort law, the Austrian Supreme Court - put in simple terms - noted that the practice of umbrella pricing involves no link of unlawfulness to the members of the cartel. Therefore, the Austrian Supreme Court made a reference to the ECJ and requested a preliminary ruling regarding the question whether Article 101 TFEU shall be interpreted as meaning that any person may claim from members of a cartel damages also for loss resulting from umbrella pricing.

The Judgement of the ECJ

The ECJ stated that Article 101 TFEU must be interpreted as meaning that it precludes the interpretation and application of domestic legislation enacted by a Member State which categorically excludes, for legal reasons, any civil liability of undertakings belonging to a cartel for loss resulting from the fact that an undertaking not party to the cartel, having regard to the practices of the cartel, set its prices higher than would otherwise have been expected under competitive conditions.

The Reasoning at a glance

The ECJ noted that any person is entitled to claim compensation for the harm suffered where there is a causal relationship between that harm and an agreement or practice prohibited under Article 101 TFEU. In this context, the judgement recalls the direct effect of the competition rules and the principle of effectiveness. Consequently, in accordance with the principle of equivalence, the rights and legal remedy, which persons derive from the direct effect of EU law, must not be less favourable than those of national law. The court stresses that the right of any individual to claim compensation strengthens the working and maintenance of the EU competition rules and reminds that in the absence of harmonization, the principle of procedural autonomy applies. This means that in the absence of EU rules, the Member States have to ensure that fundamental rights are observed and that EU competition law is fully effective. In case that EU law provides for a general right to claim damages national laws must govern the exercise thereof. In this context, umbrella pricing is one of the possible effects of a cartel that the member of the cartel cannot disregard.

The ECJ concludes that excluding the link of causality between the members of the cartel and umbrella pricing categorically, for legal reasons and regardless of the particular circumstances of the case, would run counter the full effectiveness of Article 101 TFEU and EU competition rules. It follows that members of a cartel shall compensate damages according to umbrella pricing where it is established that the cartel was liable to have the effect of umbrella pricing by the third parties.

In our view, the decisive point of claiming damages for umbrella pricing will be the question of burden of proof. The ECJ states that the categorical exclusion of any civil liability of members of a cartel for umbrella pricing is precluded. However, the claimant has to proof that the members of the cartel at issue are liable having the effect of umbrella pricing applied. In specific cases, it may not be an easy task to provide detailed evidence of umbrella pricing.